MANILA - The Philippine economy has become the regional laggard as the country continues to struggle to contain the COVID-19 pandemic and roll out its vaccination program, Moody’s Analytics said on Monday.
The Philippines’ gross domestic product is forecast to grow just 5.3 percent this year, down from an earlier forecast of 6.5 to 7 percent made in February.
Economic output isn’t forecast to return to pre-pandemic levels, defined as the December quarter of 2019, until the final quarter of 2022, Moody’s Analytics said.
“In contrast, China, Taiwan, South Korea and Vietnam have returned to previous output levels, while Indonesia and Thailand are on track to return this year,” the analytics firm said in a paper published Monday.
“This makes the Philippines the clear laggard in Asia,” the firm added.
Moody’s Analytics said the country’s decentralized healthcare system made responding to the COVID-19 outbreak inconsistent across local government units.
“As a result, there were not consistent policies and rigorousness around contact tracing, funding, and quarantine measures for those infected and their close contacts.”
The financial services form also pointed to the slow pace of the country’s vaccination rollout.
ABS-CBN’s vaccine tracker shows that as of May 20, only 949,939 have been fully vaccinated against the novel coronavirus, representing just 1.64 percent of the government’s target of vaccinating 58 million Filipinos before the end of the year.
“This is problematic, because it means the Philippines remains vulnerable to continued local infection spikes, inhibiting the economic recovery as it is assumed the government will reintroduce strict lockdowns to contain further infections.”
Moody’s Analytics said the Philippines has had difficulty containing new local COVID-19 infections despite imposing one of the strictest lockdowns in the world.
“The Philippines has one of the most stringent social restrictions, according to the government stringency index. Late in 2020, the government-mandated lockdown closed approximately 75 percent of the economy.”
The financial services firm said measures that included closing mass transportation and banning minors and the elderly from being in public places, make it among the world’s strictest lockdowns.
“Data from Apple Mobility Trends and Google Trends show that the Philippines is far from back to pre-pandemic levels of activity, unsurprising given the elevated infections and government orders to stay home since late March in the capital and surrounding areas.”
It noted that transit stations and routes and driving routes are all relatively quiet in the Philippines compared with its Southeast Asian neighbours and prior to the pandemic, ensuring that consumers and businesses are not operating anywhere near capacity and the recovery is not powering ahead.
“The Philippines also has a high percent of positive results in COVID-19 testing, implying that a relatively high degree of cases are going undetected,” the firm added.
Earlier this month, Fitch Solutions also lowered its economic growth forecasts for the Philippines for this year and next year noting that the country is having difficulty checking the COVID-19 outbreak, and is struggling to vaccinate its citizens.
Fitch Solutions Country Risk and Industry Research forecast the country’s gross domestic product to grow 5.3 percent this year, down from an earlier forecast of 5.8 percent.
Moody’s Analytics said the sluggish economic recovery paired with relatively strict lockdown measures has increased inequality.
“Those in higher-paying jobs tend to be office workers, and they have been able to transition to working from home, while lower-income workers have not had that option. The unemployment rate has increased as a result, particularly at the lower-income segment.”
Government economic managers earlier said that jobless figures have fallen from heights reached at the start of the lockdowns imposed last year.
Independent economists and even the Asian Development Bank however pointed out that the new jobs created were in the informal sector and were not quality jobs that provided security.
The economy contracted 9.6 percent in 2020, its worst performance since the end of World War 2. The GDP shrank 4.2 percent in the first quarter, the fifth straight quarter of contraction.